Endowment claims beat the deadline

CONSUMERS who have waited too long to make a claim for endowment mis-selling have been given new hope by an independent watchdog.

The Financial Ombudsman Service has issued new guidance that makes it clear it will waive claims deadlines where consumers can point to exceptional circumstances that prevented them from complaining within the time limit.

Since June 2004, the final date for a mis-selling claim has been set at three years from the firm's first 'red letter' warning to the consumer about the high risk of a shortfall. However, the FOS stresses that this rule applies only if the consumer also received – within the three-year period and at least six months before the final date – an explanation that it will not accept a claim after the final date.

The 2004 rules do not apply to cases that were already out of time, which means many consumers continue to be subject to a time bar without having received any prior notice of a deadline.

The FOS says it still receives many complaints from consumers who believe their claim has been unjustly time barred. 'These consumers often find the rules difficult to understand,' says the FOS. 'They frequently question whether the firm can restrict their access to the ombudsman service in this way.'

When it checks to see if the rules have been properly applied in an individual case, the FOS also looks to see if there are exceptional circumstances that prevented the consumer from complaining within the time limit.

'If we are satisfied that their failure to comply . . . was the result of exceptional circumstances, we can consider the complaint.'

One consumer recently won his appeal to the ombudsman despite missing the deadline. He said he had been unable to complain to the firm within the time limit because of serious health problems affecting him and his family.

His new-born baby had spent its first six months in a special baby care unit and was still seriously ill. He himself had undergone surgery for throat cancer after which he had suffered a breakdown that kept him off work for three months.

He had complained to the firm soon after he was well enough to return to work, but it had turned him down. The FOS said it should now consider his case.

In another 'exceptional' case, a woman won her appeal against time-barring because the 'red letter' had been wrongly addressed. The number of her flat was 1/1, but the mail had been addressed to number 11, when there was no number 11 in the building.

The ombudsman said: 'We accepted there was a possibility that she had received the letters. But we thought it entirely possible that the letters were delivered to another flat, or not at all.'